FOR RELEASE:

Green Island Union Free School District’s unreserved fund balance totaled $737,166, more than three times the limit allowed by law, and multiple duties relating to the district’s financial operations were not appropriately segregated, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“When school districts keep too much money in unreserved funds, taxpayers lose,” DiNapoli said. “Green Island Union Free School District’s unreserved fund balance was too high, and they didn’t have the right checks and balances in place to monitor spending.”

DiNapoli’s audit, covering July 2006 through October 2007, found the district’s unreserved fund balance totaled $737,166 in June 2007 or about 11 percent of budgeted appropriations for fiscal year 2007-08, which is more than three times allowed by law. Any fund balance at the end of the fiscal year that is more than three percent is supposed to be appropriated to the following year’s budget to reduce the district’s tax levy.

Auditors discovered the district maintained an excessive fund balance since June 2005 because it overestimated expenditures and failed to appropriate the funds to the next year’s budget. This most likely resulted in higher than necessary tax levies.

Auditors also determined that the district’s controls over purchasing and claims processing were not appropriately designed or operating effectively to safeguard the district’s finances. Prior to September 2007, the district did not have any written policies or procedures in place regarding purchases. As a result, expense claims were paid without proper authorization and supporting documentation.

In addition, the superintendent acted as the district’s purchasing agent and claims auditor even though Education Law expressly prohibits superintendents from acting as claims auditors. Failing to appoint an independent claims auditor put the district’s finances at risk of paying for improper or illegal claims.

The audit also found that the district:

• paid $497,726 in claims without prior Board audit and approval; of that $390,209 in claims also lacked sufficient supporting documentation;
• did not properly segregate the treasurer’s duties to ensure proper checks and balances over financial transactions;
• improperly appointed a Board of Cooperative Educational Services employee as its internal auditor, putting the internal auditor in the position of evaluating her employer’s services to the district; and
• had no formal disaster recovery plan and did not backup data daily or restrict user access rights based on employee roles.

The audit recommends that district officials:

• develop a plan to reduce the unreserved fund balance in the general fund and prepare accurate budget estimates;
• properly audit and approve all claims prior to payment;
• terminate relationships that do not meet independence requirements and properly segregate all duties; and
• develop a formal disaster recovery plan, ensure that data is backed up on a routine basis and appropriately restrict user access rights to match employee’s duties.

The district’s full response is included in the audit.

Click here to view the audit.

School District Accountability:
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s 834 school districts, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. The State Comptroller’s office has completed 425 school audits and approximately 200 school audits are currently underway.

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